Citadel Buys Majority of Situational Awareness Stock Portfolio

Citadel acquired a large portion of Situational Awareness’s public equity portfolio after the hedge fund recorded steep losses in July, according to investor communications and a letter to investors.

The fund, founded by former OpenAI researcher Leopold Aschenbrenner, fell roughly 67% in July and the investor letter noted the fund ‘remained up about 80% for the year.’ The firm had posted strong gains through June before the AI-focused market sell-off caused sharp mark-to-market losses.

Facing liquidity pressure, the fund approached investors and lenders for capital and offered some backers the option to buy assets from its portfolio. The firm agreed late on Wednesday to sell $3.5 billion of Anthropic shares to a group led by Greenoaks and Sequoia Capital, but the planned sale was withdrawn the next morning.

A portion of the fund’s public equity holdings, described in communications as a discounted or leveraged portfolio, was purchased by Citadel. The specific securities involved in the transaction were not disclosed and it is unclear whether formal margin calls were issued before the sales.

After the transactions, Situational Awareness retained about $10 billion in remaining public and private investments, including continued stakes in Anthropic. Several companies tied to the fund saw large declines in July: SanDisk fell about 44% for the month before a partial recovery, CoreWeave declined nearly 26% and Bloom Energy dropped around 32%. A March 31 filing showed direct positions in those names.

The same filing listed about $1.11 billion in shares of seven publicly traded Bitcoin mining companies, including Iren, Core Scientific, Riot Platforms and CleanSpark. Those positions gave the fund exposure to miners that have been repurposing excess capacity and data center space for AI and high-performance computing workloads. It is not known whether Citadel acquired any of those mining positions or whether the fund still holds them.

Aschenbrenner named the firm after his 2024 essay series ‘Situational Awareness: The Decade Ahead,’ which argued artificial general intelligence could emerge by 2027 and drive demand for computing power and electricity. Before joining OpenAI, he was on the five-person team at the FTX Future Fund and signed that group’s November 2022 resignation documents during the FTX collapse.

Neither Situational Awareness nor Citadel provided comment in response to requests. Investors and lenders involved in the transactions have not publicly disclosed a full list of assets transferred or the terms of the sale.